Market Wrap: Cryptocurrencies Stabilize as Some Traders Buy the Dip

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Bitcoin has been roughly flat for the past 24 hours as buyers have tried to continue to reverse some of last weekend’s losses. Some short-term traders are buying on dips, while others remain cautious about what crypto prices will be over the next month.

“Despite the shocking sell-off, volatile markets remain relatively quiet. The knee-jerk in BTC and ETH implied volatility has faded very rapidly and the volatile term structure has returned to an upward slope, indicating no heightened fear or panic in the near future,” the cryptocurrency firm said. QCP Capital wrote in a Telegram announcement.

Also, Three Arrows Capital, a Singapore-based hedge fund, bought more than 90,000 ETHs worth about $ 400 million over the weekend, according to wallet data shown on Etherscan. The move comes just weeks after co-founder Su Zhu “left” Ethereum because of its prohibitively high fees for new users, CoinDesk’s Lyllah Ledesma reported.

Latest Prices

  • Bitcoin (BTC): $ 50,835, + 0.81%
  • Ether (ETH): $ 4,422, + 3.21%
  • S&P 500: $ 4,701, + 0.32%
  • Gold: $ 1,785, + 0.07%
  • 10-year Treasury yield closed at 1.52%

From a technical perspective, the recent liquidation reflects “a loss of medium-term momentum that serves as an impetus to reduce exposure to bitcoin and cryptocurrencies broadly,” said Katie Stockton, managing partner at. Fairlead Strategies, a technical research firm, wrote in a report this week.

However, the delayed return on ether has recently been unusual in a market where traders are wary of riskier assets, Stockton noted. “ETH’s long-term uptrend has not been affected by its withdrawal – long-term momentum is still higher,” she wrote.

On the regulatory front, the U.S. House Financial Services Committee screened six crypto-business executives and stable coins at a hearing Wednesday. Discussions focused on security frameworks, the anonymous nature of crypto transactions and how Congress can incorporate digital assets into existing regulatory standards. Read CoinDesk live coverage here.

Bitcoin in fear mode

The Bitcoin Fear & Greed Index has declined to its lowest level since late July during weekend sales. Some analysts view the index as the opposite signal, suggesting that buyers could return to buy BTC on prices. Previous “extreme fear” readings preceded prices similar to what happened in August and October.

Bitcoin Fear and Greed Index (Arcane Research)

They come back narrow

Bitcoin’s return so far has narrowed relative to the S&P 500 over the past month. However, despite the recent sell-off, bitcoin has risen about 75%, compared to a 22% return in the S&P 500 and a 34% return in the Thomson Reuters Core Commodity CRB Index so far this year.

On a related note, bitcoin’s Sharpe ratio (risk-adjusted return) is comparable to the S&P 500 and Nasdaq over the past year, according to data compiled by IntoTheBlock.

Bitcoin and S&P 500 returns so far (CoinDesk)

Altcoin roundup

  • Polygon’s MATIC token rises amid crypto recovery: MATIC has increased by 25% over the past week, compared to an 11% decrease in BTC over the same period. The increase came as more users became aware of Polygon’s lower costs and greater efficiency and scalability. Speculation has also risen over what the company called an “exciting announcement” scheduled for Thursday at Polygon virtual “zk-day”.
  • Not all alternative cryptocurrencies move smoothly with ETH: While some decentralized finance (DeFi) tokens are correlated with ether, metaverse tokens such as The Sandbox’s Sandbox and Decentraland’s MANA have been less correlated with ether, according to a statistical study by Currency Metric. “Some tokens on Ethereum today seem to reap stories that are less tied to ETH itself, showing the potential benefits to diversification,” Coin Metrics wrote.
  • Within EIP 4488: Last week, Ethereum co-founder Vitalik Buterin introduced Ethereum Improvement Proposal (EIP) 4488, an update that could reduce transaction costs for Ethereum rollups such as Arbitrum, Optimism and zkSync. The proposal detailed the immediate steps to push gas quotas down without sacrificing security, as well as the roadmap to move forward after ”Merge. ” Edward Oosterbaan of CoinDesk explored some of the ideas contained in the proposal here.

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Other markets

Most digital assets in the CoinDesk 20 ended the day higher.

Famous winners at 21:00 UTC (4:00 pm ET):

  • EOS (EOS), + 13.93%
  • Chain Link (LINK), + 11.91%
  • Internet Computer (ICP), + 7.41%

Notable losers:

  • Polkadot (POINT), -1.16
  • Algorand (SOMETHING), -0.28%

Source

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